Wednesday, June 17, 2009
Unitech home sales rise, debt comfortable
Unitech home sales rise, debt comfortable
The Financial Express, June 17, 2009, Corporates & Markets, PVIII
Reuters, New Delhi
Unitech Ltd, India's second-largest listed developer, is seeing home sales picking up and is not under pressure for cash after raising about $550 million in the past two and half months, Sanjay Chandra, managing director Unirtech said on Tuesday.
“The company aims to build 20 million square feet of property in 2009/10”, he said, adding the focus was on low-cost mass housing projects, a strategy larger rival DLF has also adopted. The company, which raised Rs 1,617 crore in April by selling shares to institutions, has got more than Rs 1,000 from asset sales since the fiscal year began on April 1, Chandra said on Tuesday.
Unitech has sold two hotels and one office property in New Delhi, he said, to raise funds for projects and to cut debt. It also sold about 4,000 homes in the last two and half months. "Sales are very, very healthy. The market has definitely bottomed out. The volume of sales, which are happening right now, we have never seen before, though prices are down 25-30% from (2007) peaks," Chandra said.
In April, Unitech had said its net debt stood at Rs 8,400 crores and it would have to sell stock and assets to cut debt. Chandra said most of the debt had been rescheduled and the position was now "comfortable".
"We are not under pressure to raise equity capital," he said. The developer got shareholder approval on Tuesday for selling up to one billion shares to investors, but Chandra said this was an enabling resolution and there was no immediate plan for a sale. The shareholders also approved issuing 227.5 million convertible warrants to one of its founder group firms.
The Financial Express, June 17, 2009, Corporates & Markets, PVIII
Reuters, New Delhi
Unitech Ltd, India's second-largest listed developer, is seeing home sales picking up and is not under pressure for cash after raising about $550 million in the past two and half months, Sanjay Chandra, managing director Unirtech said on Tuesday.
“The company aims to build 20 million square feet of property in 2009/10”, he said, adding the focus was on low-cost mass housing projects, a strategy larger rival DLF has also adopted. The company, which raised Rs 1,617 crore in April by selling shares to institutions, has got more than Rs 1,000 from asset sales since the fiscal year began on April 1, Chandra said on Tuesday.
Unitech has sold two hotels and one office property in New Delhi, he said, to raise funds for projects and to cut debt. It also sold about 4,000 homes in the last two and half months. "Sales are very, very healthy. The market has definitely bottomed out. The volume of sales, which are happening right now, we have never seen before, though prices are down 25-30% from (2007) peaks," Chandra said.
In April, Unitech had said its net debt stood at Rs 8,400 crores and it would have to sell stock and assets to cut debt. Chandra said most of the debt had been rescheduled and the position was now "comfortable".
"We are not under pressure to raise equity capital," he said. The developer got shareholder approval on Tuesday for selling up to one billion shares to investors, but Chandra said this was an enabling resolution and there was no immediate plan for a sale. The shareholders also approved issuing 227.5 million convertible warrants to one of its founder group firms.
Demand revival brings back inflation fears
Demand revival brings back inflation fears
The Economic Times, June 17, 2009, Page 11
Anto Antony, ET Bureau
NEW DELHI: The warnings of deflation earlier this year are being replaced by fears of inflation as price increases begin to build up again on the back of a demand revival in the economy, excess liquidity and surging commodity prices.
The expected hardening of inflation and incrementally-positive data inflow on the growth front could trigger a long pause on the monetary policy front, say economists.
An upward revision in expected inflation at the end of the fiscal year to 6.5% from an earlier forecast of 3% by Goldman Sachs shows that inflationary expectations are beginning to build up again.
An analysis of the week-on-week movement of items in the basket of the wholesale price index and the consumer price indices shows that the fall in prices had bottomed out by March this year. Reserve Bank of India governor Duvvuri Subbarao’s comment that it might be time to start thinking about reversing ‘expansionary’ policies gathers a new dimension in light of the new scenario.
Along with the rising cost of living for the common man, an upward spike in inflation will also push up borrowing costs. The central government is expected to raise more than Rs 3.6 lakh from the market to plug the fiscal gap.
Goldman Sachs’ research note also pointed out that the output gap would continue to shrink and will further exert upward pressure on prices.
The growth in broad money (M3) was over 20% on a year-on-year basis in May, way above the central bank’s target of 17%, hinting at the excess liquidity in the system. “While recovery is not yet visible on the export front, industrial production is beginning to do better and an improvement in domestic and global investment climate is happening. The fall in prices has bottomed out,” says DK Joshi, chief economist at credit ratings agency Crisil.
Unitech may issue a billion shares
Unitech may issue a billion shares
Business Standard, June 17, 2009, Page 2
BS Reporter / New Delhi
Hopes to mop Rs 8,500 crore; promoters could raise stake by 5%.
Bolstered by the sharp run-up in its share price after the recent private placement, the country’s second-largest realty firm Unitech today took shareholders’ approval to issue up to a billion shares to raise more funds.
At the current market price of around Rs 87 a share, the company could bring in around Rs 8,500 crore through this route.
In addition, the company would raise Rs 1,150 crore through a preferential issue of convertible warrants to promoters at Rs 50 each. Each warrant is convertible into one equity share.
“The real estate market has bottomed out and investors are showing an interest in realty companies. Even though we do not need to raise funds immediately, we want to be ready as the market sentiment is very bullish,” said Sanjay Chandra, managing director, Unitech.
In April 2009, the company mobilised Rs 1,625 crore through issue of fresh shares to select foreign and domestic investors. Of the funds raised through QIP, Unitech used Rs 700 crore for repayment of a part of its debt, which is about Rs 7,800 crore.
“Our sale of assets in the past two months has fetched us more than the expected amount and we expect to mop over Rs 1,700 crore by the end of this fiscal, as against Rs 1,600 crore expected earlier,” Chandra added.
Till date, the company claims to have raised nearly Rs 1,000 crore through the sale of its two hotel properties and a commercial office space in Delhi NCR.
The company also got shareholders’ approval to issue 227.5 million convertible warrants on a preferential basis to promoters at Rs 50 for each. The promoter group will pay 25 per cent of the total amount in the next 15 days. On conversion of the warrants, the promoters’ stake in Unitech will go up by 5 per cent. It is 51 per cent currently.
On the listing of its real estate investment trust (REIT) on the Singapore Stock Exchange, Chandra said the market in Singapore was not good enough to get the desired money through public issue of its commercial assets.
“We were able to raise more money by selling our assets to high net worth individuals and will continue to do so this year. The listing of REIT would take another year,” said Chandra.
The company has booked over 4 million sq ft of residential space in the past two months and expects booking of around 20 million sq ft of space by the end of this fiscal year.
DLF arm winds up retail JV with Italy’s Piquadro
DLF arm winds up retail JV with Italy’s Piquadro
The Economic Times, June 17, 2009, P18
Shuts Down New Delhi Store & Dismantles Team Working On Brand
Sarah Jacob & Boby Kurian BANGALORE
DLF Brands is winding up its joint venture with Italian leather and luggage accessories major Piquadro to open a chain of monobrand stores in the country. The development comes even as real estate giant DLF’s retail management arm is resetting growth strategies following an economic downturn, and reviewing the expansion plans of a few international fashion and lifestyle brands it operates locally, informed sources said.
The 51:49 JV between Piquadro and DLF Brands was projected to open 16 exclusive stores by 2013. DLF has closed down the first high-end Piquadro store opened in New Delhi almost six months back and has dismantled an internal team working on the brand.
Timmy Sarna, CEO of DLF Brands, confirmed the closure of the existing Piquadro store. “Piquadro is a very sophisticated brand, which is much ahead of its time with regard to the Indian market. It had a higher price positioning than our other brands and was unable to garner enough brand recall,” he said, when contacted.
However, he added that DLF may revisit plans and introduce Piquadro with more stores in the next few years once the market is ready. DLF did not respond to a specific query on the current status of the Piquadro JV.
Mr Sarna also denied that DLF was putting expansion plans on hold or reviewing the business strategy of a few other international partnerships with Italian apparel brand Alcott and French home decor retailer SIA. He added that the company was poised to open 15 odd new stores in the next few weeks across its brand portfolio. It operates a network of 20 stores currently.
DLF Brands had signed up a host of global brands in the premium-to-luxury segments over the last two years. This included high-profile JVs with Giorgio Armani, Salvatore Ferragamo and Dolce & Gabbana. Besides, it had also roped in brands like Alcott, Boggi, SIA, Sunglass Hut among others either through licensing deals or joint ventures.
This large portfolio had niche global brands with not-so-high brand recall in India. Sectoral observers said DLF Brands could be reworking its retail play and expansion plans of several brands in the wake of the changed economic climate. But sources said its JVs with Giorgio Armani and Ferragamo were on firm ground even though fresh store openings is likely to be deferred in the prevailing conditions.
REALITY CHECK
Move comes in wake of the Italian brand not being able to garner enough brand recall
DLF may revisit plans and introduce Piquadro with more stores in the next few years once the market is ready
The 51:49 JV between Piquadro and DLF Brands was projected to open 16 exclusive stores by 2013.
DLF’s retail management arm is resetting growth strategies following an economic downturn
It is reviewing expansion plans of a few international fashion and lifestyle brands it operates locally
DLF Brands had inked high-profile JVs with cos like Giorgio Armani, Salvatore Ferragamo and Dolce & Gabbana in last two years
Ansal Properties rises on fund-raising plan
Ansal Properties rises on fund-raising plan
Business Standard, June 17, 2009, Money & Markets, P 1
BS Reporter / Mumbai
Ansal Properties & Infrastructure shares hit the 5 per cent upper circuit to close at Rs 63.25 on the company’s plan to raise funds through a qualified institutional placement (QIP). The Rs 1,500-crore that the company will raise will be used to partly fund two large hi-tech integrated townships and group housing projects in Lucknow and Dadri.
The board will also seek approval from the company’s shareholders to float a public issue or any other issue from time to time to raise up to Rs 2,500 crore. The stock opened at Rs 60 and made an intraday low of Rs 59.5 before touching the day’s high. Total traded volumes stood at 1.32 million shares.
Minister pitches for cheaper housing loans
Minister pitches for cheaper housing loans
Business Standard, June 17, 2009, Section II, Page 2
Press Trust Of India / New Delhi
In order to revive the demand in the real estate sector, Urban Development Minister Jaipal Reddy today favoured cheaper loans for buying houses.
“Real estate is facing a slowdown. So, we should make an arrangement for giving loans at 6.5 per cent for houses in the below Rs 5-lakh category to the poor,” he said after his meeting with Finance Minister Pranab Mukherjee here.
“It was a pre-Budget meeting and we discussed budgetary issues with the finance minister,” he told reporters. Reddy suggested extension of housing loan at 7.5 per cent presently available for flats up to Rs 20 lakh to those priced at Rs 30 lakh in cities.
“The revival of real estate is the key for generating employment. The existing 7.5 per cent interest scheme should also be extended beyond June to motivate more buyers,” he said. Reddy sought more budgetary allocations for Commonwealth Games projects, DMRC extension and JNNURM projects.
“Keeping the ongoing Games projects in mind, we have sought more budgetary provisions,” he said, adding that more funds for Delhi Metro extension programmes were also sought. “Our JNNURM programme is the most successful one and now, more and more states are seeking projects under the scheme. So we have asked for more budgetary allocations for it,” he said.
US housing projects climb
US housing projects climb
Business Standard, June 17, 2009, P11
Bloomberg / Washington
Housing starts jumped more than forecast in May while industrial production tumbled, offering a picture of an American economy still struggling to emerge from the deepest recession in half a century.
Builders broke ground on 532,000 dwellings at an annual rate, with single-family starts posting a third straight gain, Commerce Department figures showed today in Washington. Output at factories, mines and utilities dropped 1.1 per cent, and the share of industrial capacity in use slid to a record low, the Federal Reserve said.
“The paralysis and the panic phase of this downturn is behind us” and “the rate of decline has slowed, but there are lots of problems that have yet to be cleaned up,” said Joshua Shapiro, chief US economist at Maria Fiorini Ramirez Inc in New York.
Homebuilders’ shares advanced for the first time in five days after the housing report reinforced evidence that the industry’s decline, now in its fourth year, will end in the second half. At the same time, rising unemployment may prevent any boom after the bust, and stunt a manufacturing recovery.
Wholesale prices dropped 5 per cent in the 12 months to May, the biggest slump in half a century, the Labor Department also reported on Tuesday. On a monthly basis, the producer-price index rose 0.2 per cent, less than forecast.
The recession, which began in December 2007 and spread across the globe, has pulled down industrial commodity prices, with steel costs dropping more than half from July to last month. Nucor Corp, the second-largest US steel producer by sales, said in May it was running its mills at 45 per cent capacity.
Nucor, based in Charlotte, North Carolina,on Tuesday forecast a second-quarter loss that’s narrower than analysts’ estimates and said it has seen orders increase. “Order entry has improved in recent weeks,” Nucor Chief Executive Officer Dan DiMicco said.
The Standard & Poor’s 500 Stock Index climbed after Tuesday’s figures, rising 0.3 per cent to 926.65 as of 10.46 am in New York. The S&P homebuilder supercomposite index was up 3 per cent.
Yields on benchmark 10-year notes rose for the first time in four days, to 3.75 per cent, from 3.71 per cent late on Monday.
Housing starts were projected to rise to a 485,000 annual pace, according to the median forecast of 71 economists surveyed by Bloomberg News. Estimates ranged from 450,000 to 600,000.
Permits rose 4 per cent to a 518,000 pace from a 498,000 rate the previous month. They were forecast to increase to a 508,000 annual rate.
Construction of single-family homes rose 7.5 per cent to a 401,000 rate. Work on multifamily homes, such as townhouses and apartment buildings, jumped 62 per cent to an annual rate of 131,000.
The increase in starts was led by a 29 per cent jump in the West and a 17 per cent increase in the South. They rose 11 per cent in the Midwest and 2 per cent in the Northeast.
Toll Brothers Inc, the largest luxury homebuilder, and Hovnanian Enterprises Inc, New Jersey’s biggest builder, this month reported quarterly losses as revenue plunged. Still, the companies narrowed their losses from a year earlier.
“Although we are still at very low levels we are seeing signs it looks like that maybe we are at a bottom,” Joel Rassman, Toll Brothers’ chief financial officer, said in an interview on Bloomberg Television on Monday. “The programmes that have been put in are maybe working for the economy.” Rassman said Toll has seen increases in deposits, buyer traffic and sales agreements over the last two months.
The Fed’s production report showed manufacturing, which accounts for about fourth-fifths of the total, dropped 1 per cent after a 0.6 per cent decrease in April. Factory production was down 15 per cent since May 2008, the biggest 12-month drop since 1946.
The fallout from bankruptcies at Chrysler LLC and General Motors Corp may ripple beyond auto-related industries in coming months. Motor vehicle and parts production slumped 7.9 per cent in May after falling 1.2 per cent the prior month, Tuesday’s report showed.
Chrysler shut all its plants on May 1 to clear as many unsold vehicles as possible from dealer lots while it restructures. The sale of most of Chrysler’s assets to a group led by Italian automaker Fiat SpA was completed last week.
GM, the biggest US automaker, said June 1 it is stopping work at 14 plants as it restructures.
Excluding automobiles, factory output dropped 0.6 per cent for a second month. In addition to cars, other consumer goods retreating last month included home electronics, clothing and furniture and appliances.
The amount of industrial capacity in use dropped to 68.3 percent, the lowest level since records began in 1967.
One positive aspect of spare capacity is that it will help control inflation should raw-material costs keep rising, economists say.
Producer prices excluding food and energy, known as the core rate, dropped 0.1 percent in May, the first decrease in more than two years, Labor’s report showed.
“The slack in resource utilization remains sizable, and, notwithstanding recent increases in the prices of oil and other commodities, cost pressures generally remain subdued,” Fed Chairman Ben S. Bernanke told Congress on June 3. “We anticipate that inflation will remain low.”
Business Standard, June 17, 2009, P11
Bloomberg / Washington
Housing starts jumped more than forecast in May while industrial production tumbled, offering a picture of an American economy still struggling to emerge from the deepest recession in half a century.
Builders broke ground on 532,000 dwellings at an annual rate, with single-family starts posting a third straight gain, Commerce Department figures showed today in Washington. Output at factories, mines and utilities dropped 1.1 per cent, and the share of industrial capacity in use slid to a record low, the Federal Reserve said.
“The paralysis and the panic phase of this downturn is behind us” and “the rate of decline has slowed, but there are lots of problems that have yet to be cleaned up,” said Joshua Shapiro, chief US economist at Maria Fiorini Ramirez Inc in New York.
Homebuilders’ shares advanced for the first time in five days after the housing report reinforced evidence that the industry’s decline, now in its fourth year, will end in the second half. At the same time, rising unemployment may prevent any boom after the bust, and stunt a manufacturing recovery.
Wholesale prices dropped 5 per cent in the 12 months to May, the biggest slump in half a century, the Labor Department also reported on Tuesday. On a monthly basis, the producer-price index rose 0.2 per cent, less than forecast.
The recession, which began in December 2007 and spread across the globe, has pulled down industrial commodity prices, with steel costs dropping more than half from July to last month. Nucor Corp, the second-largest US steel producer by sales, said in May it was running its mills at 45 per cent capacity.
Nucor, based in Charlotte, North Carolina,on Tuesday forecast a second-quarter loss that’s narrower than analysts’ estimates and said it has seen orders increase. “Order entry has improved in recent weeks,” Nucor Chief Executive Officer Dan DiMicco said.
The Standard & Poor’s 500 Stock Index climbed after Tuesday’s figures, rising 0.3 per cent to 926.65 as of 10.46 am in New York. The S&P homebuilder supercomposite index was up 3 per cent.
Yields on benchmark 10-year notes rose for the first time in four days, to 3.75 per cent, from 3.71 per cent late on Monday.
Housing starts were projected to rise to a 485,000 annual pace, according to the median forecast of 71 economists surveyed by Bloomberg News. Estimates ranged from 450,000 to 600,000.
Permits rose 4 per cent to a 518,000 pace from a 498,000 rate the previous month. They were forecast to increase to a 508,000 annual rate.
Construction of single-family homes rose 7.5 per cent to a 401,000 rate. Work on multifamily homes, such as townhouses and apartment buildings, jumped 62 per cent to an annual rate of 131,000.
The increase in starts was led by a 29 per cent jump in the West and a 17 per cent increase in the South. They rose 11 per cent in the Midwest and 2 per cent in the Northeast.
Toll Brothers Inc, the largest luxury homebuilder, and Hovnanian Enterprises Inc, New Jersey’s biggest builder, this month reported quarterly losses as revenue plunged. Still, the companies narrowed their losses from a year earlier.
“Although we are still at very low levels we are seeing signs it looks like that maybe we are at a bottom,” Joel Rassman, Toll Brothers’ chief financial officer, said in an interview on Bloomberg Television on Monday. “The programmes that have been put in are maybe working for the economy.” Rassman said Toll has seen increases in deposits, buyer traffic and sales agreements over the last two months.
The Fed’s production report showed manufacturing, which accounts for about fourth-fifths of the total, dropped 1 per cent after a 0.6 per cent decrease in April. Factory production was down 15 per cent since May 2008, the biggest 12-month drop since 1946.
The fallout from bankruptcies at Chrysler LLC and General Motors Corp may ripple beyond auto-related industries in coming months. Motor vehicle and parts production slumped 7.9 per cent in May after falling 1.2 per cent the prior month, Tuesday’s report showed.
Chrysler shut all its plants on May 1 to clear as many unsold vehicles as possible from dealer lots while it restructures. The sale of most of Chrysler’s assets to a group led by Italian automaker Fiat SpA was completed last week.
GM, the biggest US automaker, said June 1 it is stopping work at 14 plants as it restructures.
Excluding automobiles, factory output dropped 0.6 per cent for a second month. In addition to cars, other consumer goods retreating last month included home electronics, clothing and furniture and appliances.
The amount of industrial capacity in use dropped to 68.3 percent, the lowest level since records began in 1967.
One positive aspect of spare capacity is that it will help control inflation should raw-material costs keep rising, economists say.
Producer prices excluding food and energy, known as the core rate, dropped 0.1 percent in May, the first decrease in more than two years, Labor’s report showed.
“The slack in resource utilization remains sizable, and, notwithstanding recent increases in the prices of oil and other commodities, cost pressures generally remain subdued,” Fed Chairman Ben S. Bernanke told Congress on June 3. “We anticipate that inflation will remain low.”
Affordable housing a cloak to cut debt?
Affordable housing a cloak to cut debt?
Hindustan Times, June 17, 2009, page 23
Does, affordable housing, the new buzzword in the real estate sector, conceal a smart back-end trick from developers who have launched budget homes, some costing less than Rs 10 lakh?
Industry analysts watching the game say the proceeds earned through the bookings are being used to pay back debtors as well as lending surplus cash flow at 20 per cent interest in the market.
“Affording housing schemes have brought lot of cash into hands of developers. Many are servicing their debt through this earning,” said Samir Jasuja, managing director, Prop Equity.
“They (developers) have got flexibility to utilize the cash for 12 to 18 months even if they make no profit in selling the flats. It is a win-win situation for both developers and buyers,” said Jasuja whose firm tracks 2,500 developers in 35 cities and provides market information to private equity investors.
Some experts say affordable housing is a good way for developers to make up for the excesses of buying land at high prices.
Most developers take 10 per cent (price of flat) at the time of booking, 15 per cent within 45 days, 10 per cent on excavation, 10 per cent on the first slab and 5 per cent towards cost of construction. But actual constrution starts much later.
“The developers have gone where the demand is. At least there is momentum. The high volume of business would keep them going though with lower margins,” said Gautam Mehra, executive director (real estate practice), PriceWaterhouseCoopers.
Hindustan Times, June 17, 2009, page 23
Does, affordable housing, the new buzzword in the real estate sector, conceal a smart back-end trick from developers who have launched budget homes, some costing less than Rs 10 lakh?
Industry analysts watching the game say the proceeds earned through the bookings are being used to pay back debtors as well as lending surplus cash flow at 20 per cent interest in the market.
“Affording housing schemes have brought lot of cash into hands of developers. Many are servicing their debt through this earning,” said Samir Jasuja, managing director, Prop Equity.
“They (developers) have got flexibility to utilize the cash for 12 to 18 months even if they make no profit in selling the flats. It is a win-win situation for both developers and buyers,” said Jasuja whose firm tracks 2,500 developers in 35 cities and provides market information to private equity investors.
Some experts say affordable housing is a good way for developers to make up for the excesses of buying land at high prices.
Most developers take 10 per cent (price of flat) at the time of booking, 15 per cent within 45 days, 10 per cent on excavation, 10 per cent on the first slab and 5 per cent towards cost of construction. But actual constrution starts much later.
“The developers have gone where the demand is. At least there is momentum. The high volume of business would keep them going though with lower margins,” said Gautam Mehra, executive director (real estate practice), PriceWaterhouseCoopers.
Subscribe to:
Posts (Atom)
Posts
